Blockchain to improve supply chain traceability

A supply chain is the network of all the individuals, teams, and organisations involved in creating and selling a product. Therefore, it is of paramount importance to every business. Yet, specific issues such as lack of transparency, security, and traceability disrupt the supply chain from time to time.

This disruption causes substantial financial losses to businesses globally. But integrating blockchain technology with supply chain management will curb these issues. Blockchain is a marvellous technology with numerous benefits, one of which is its critical role in improving supply chain traceability.

Why are Companies Implementing Blockchain in Supply Chain Management?

Blockchain is a publicly distributed ledger. It comprises interlinked blocks that are extremely difficult to forge. It means that the information stored in these blocks is trustworthy and secure.

Therefore, implementing blockchain in supply chain management offers multiple benefits. One of the most significant benefits is that it enables one organisation to trust another. Hence, allowing businesses to operate peacefully in a zero-trust environment.

Benefits of Using Blockchain Technology in Supply Chain Management

We live in a technologically advanced world. Yet, sometimes, supply chains are subjected to challenges such as lack of efficiency, counterfeiting, fraud, low accountability, etc. However, blockchain intends to make business processes more efficient and cost-effective.

There are several other benefits of implementing a blockchain-based supply chain solution. Some of them are listed below:

Improved Efficiency: Supply chain consists of several actors, including warehouses, manufacturers, suppliers, and retailers – and blockchain is a public ledger. Blockchain will improve efficiency and communication by reducing unnecessary paperwork and automating procedures.

Increased Accuracy: Blockchain transmits data in real-time. This feature eliminates the need for multiple emails since everyone with permission in the network can access all the information. Moreover, no one can tamper with the blocks. Hence, all the information in them is trustworthy.

Boosts security: Blockchain stores information in highly secured blocks. Since these blocks are interlinked, it is tough to tamper with them. This makes the blockchain the perfect technology to store your data immutably if you want to protect it from cybercrime and other vulnerabilities.

Transparent and Traceable: All the organisations involved in a supply chain can easily track their product on blockchain. It makes supply chain procedures more transparent. Product location is easily determined and prevents incidents like counterfeiting, fraud, theft, etc. Food and pharmaceutical industries will highly benefit from this.

Cost Reduction: Going digital will help businesses cut costs related to paper, human resources, storage, and labour, making it easier to record data. Hence, increasing efficiency while cutting down costs.

Blockchain-Based Supply Chain Use Cases

The modern supply chain is a complex environment. It involves hundreds of individuals and organisations. According to Maersk, one shipment of refrigerated goods from East Africa to Europe involves more than 200 interactions. Hence, implementing blockchain in supply chain management is of paramount importance.

Blockchain-based supply chains are still a fresh concept for many. The following use cases will help you understand it better:

Finance: Blockchain-based supply chain provides more transparent and secure transactions while increasing invoice processing efficiency. Moreover, it will make supplier payments more accessible and faster. Businesses can implement smart contracts to facilitate payment as soon as the product is delivered.

Transparency: Blockchain enables businesses to improve transparency through process tracking, regulatory compliance, reporting, and certifications. Companies can track a product throughout its lifetime. Moreover, automated compliance and reporting will increase the number of quality products, reducing reporting costs and eliminating errors.

Traceability: Modern consumers are savvy and ask for all the details of their products. Blockchain helps businesses to engage their customers with immutable data. It also helps streamline product recalls and reduce incidents of counterfeiting and theft. Furthermore, recalls have become faster and cheaper. Meanwhile, the safe storage of documents and other information in the blockchain ensures the product’s high quality.

Companies Using a Blockchain-Based Supply Chain Management

Blockchain has gained much importance in supply chain management over the past few years. Several organisations have implemented a blockchain-based solution to improve their supply chain traceability. These organisations include Walmart, IBM, Bumble Bee Seafoods, Brilliant Earth, and more.

Some of the real-world examples of blockchain-based supply chains are:

Walmart: Walmart is planning to digitise the entire food supply chain process. Employees can track the provenance of food products in just a few seconds. It will also help in eliminating any contamination or deterioration of products.

Ford: Ford will utilise the blockchain to track cobalt supplies, an essential ingredient for electric car batteries. They will record cobalt on the ledger as soon as it is mined. From there, the company will track the product until it reaches them. Therefore, keeping a check on the authenticity of the product.

Brilliant Earth: Tracking diamonds from the source is only one use of blockchain for Brilliant Earth. In addition, they are also planning to give their customers autonomy to check all the details of diamonds before buying them. The customers can check the rough carat weight, mining region, images of the rough diamond, and 360-degree video of the polished one.

FedEx: FedEx is a shipping giant, so naturally, it needs the best tracking system. Thus, they joined BiTA to launch a blockchain-powered pilot program. This program will let them know what data they should store on blockchain to rectify customer disputes. Moreover, implementing blockchain will improve customer service as the customers will receive information and answers faster and more reliable.

Finally thoughts,

The modern supply chain combines multiple actors, warehouses, manufacturers, retailers, suppliers, distributors, etc. Hence, keeping an eye on your product’s journey is extremely difficult and expensive. Furthermore, incidents of counterfeit, theft, damage, and cyber-attacks are expected. That’s why businesses need the assistance of blockchain.

Blockchain eases business processes while decreasing costs and increasing efficiency. Blockchain-based supply chain management is a relatively new concept. Yet, the multiple benefits of its implementation are visible. In conclusion, blockchain is the future of supply chain management, and its implementation will only benefit businesses in the long term.

Back to articles